Investment Points

The leading core supplier of endoscopy in the world, the endogenous machine business opens up room for growth. In 2008, the company became a supplier of Stryker's core components, mainly providing endoscope parts, light sources and camera adapters, etc., endoscope technical barriers are high, the company by virtue of deep optical technology and image technology advantages with its deep binding. Stryker is one of the world's leading fluorescent endoscopes, and with the development of fluorescent endoscope technology in the future, the company is expected to benefit from the iteration of Stryker's products and the launch of new products, driving continued revenue growth. With the Stryker 1788 system listed and promoted, the company's new product orders are expected to gradually land. The company has been deeply engaged in the optical field for many years, the underlying technology has accumulated deep, and the foundry production business continues to optimize the process, cutting into several times the size of the whole machine market from the parts foundry, opening up the market space.

the company's own brand core components have been gradually approved, through the direct sales in Shandong Province, outside the province distribution channels to promote the commercialization of the company's machine products, and with the national medicine Xinguang cooperation to promote, is expected to rely on the advantages of national medicine channels to accelerate the promotion of the whole product volume.

endoscope market growth potential, obvious trend of fluorescent light instead of white light. The global endoscope market is growing year by year, with sales of $20.2 billion billion in 2019 and 6% CAGR in 2019, according to Jost Sullivan. With its unique development ability, the fluorescence hard mirror can not only meet the needs of real imaging, but also meet the visual field needs of the ability to identify lesions such as tracing and detection, and the trend of replacing the white hard mirror is obvious. The global fluorescence hard mirror market size is $1.31 billion in 2019 and is expected to increase to $3.9 billion in 2024 and a CAGR of 24.3 in 2019-2024. The domestic fluorescent endoscope market started late, the market size in 2019 is only 0.11 billion yuan, is expected to increase by 100 growth rate to 3.52 billion yuan in 2024, the future with the fluorescent hard mirror technology iteration update and clinical applications continue to expand, the domestic fluorescent endoscope market will continue to grow. In terms of the global market landscape, Stryker will account for 78.4 percent of sales in 2019, a ride away. In the domestic market, there are only two Opmandy and Novadaq in 2019, showing an oligopoly pattern. In recent years, domestic manufacturers have made efforts in the field of fluorescent hard mirror, domestic products have been approved, fluorescent hard mirror industry ushered in a period of rapid growth.

broad application of optical products, extension of the terminal market extension of incremental products. The company takes optical technology as the starting point, extends the three major fields of medical optics, industrial and laser optics and biometrics, adding new revenue growth points for the company. The company's optical products 2017-2022 revenue CAGR was 22%, with steady growth, of which medical optical products contributed the vast majority of revenue. With the advantages of the underlying technology, the company will continue to develop industrial laser, mouth sweep and microscope series products in the future, continue to expand the optical products business, open up downstream application scenarios, and contribute to the company's performance.

investment advice: the company's net profit from 2023 to 2025 is expected to be 1.71/2.46/0.315 billion yuan respectively, with a growth rate of-6%/43%/28% respectively, and the corresponding PE is 42/29/23 times respectively. As Stryker continues to increase the promotion of new products, the company's cooperation new orders are expected to gradually land, while the independent brand machine accelerated promotion, the company's performance is expected to resume growth. We raised our investment rating and gave a "buy-A" rating, taking into account comparable company valuations.

Risk Warning: High risk of Stryker stickiness, risk of less than expected promotion of the whole machine, risk of exchange rate fluctuations, industry risk.